Australian Gas Group Calls for Industry Wage Curbs

The Australian government should act to curb rising labor costs that threaten a potential A$180 billion ($167 billion) expansion of the nation’s liquefied natural gas industry, a lobbying group said today.

Cooks at offshore gas projects earning more than A$350,000 a year and laundry hands getting more than A$325,000 annually are among examples of Australia’s high wages, according to the Australian Petroleum Production & Exploration Association. Some barge welders earn almost A$400,000, the group said.

Chevron Corp. (CVX) and BG Group Plc (BG/) are among energy companies that have experienced cost overruns at their Australian LNG projects. Australia has about $190 billion in LNG ventures under construction, putting the country on course to surpass Qatar as the world’s biggest supplier of the fuel. Another A$180 billion of potential investment is under threat due to high costs and increasing competition, according to APPEA.

“Our ability to capture that second wave of LNG investment is at serious risk from rising competition,” APPEA Chief Executive Officer David Byers told reporters today in Perth ahead of the group’s annual conference starting tomorrow. “If we are able to remain globally competitive and attract the capital needed to develop those projects, we have to reduce the cost of doing business in this country.”

Australia’s oil and gas industry is urging the government to introduce labor reforms that apply to mega-projects, including multi-billion dollar LNG plants, according to APPEA. The industry wants the government to prevent labor contracts from being renegotiated every four years and seeks bigger fines for illegal industrial action, as well as other measures, the group said.

A spokesman for the Minister for Employment Eric Abetz declined to immediately comment.

Some barge welders, tradespeople, cooks and laundry hands have seen wages increase 44 percent to 49 percent over the last six years, APPEA said. The annual compensation figures include retirement fund contributions, according to its presentation.

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net

To contact the editors responsible for this story: Stanley James at sjames8@bloomberg.net Garry Smith, Malcolm Scott

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